Examples of Semi-Fixed Expenses in the Hotel Industry

A fixed expense would be something like cost of land. Get examples of a semi-fixed expense in the hotel industry with help from the chief operating officer of American Eagle Financial Services Inc. in this free video clip.

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Welcome, this is LLoyd Lofton. Today, we're going to go through some examples of semi fixed expenses in the hotel industry. You know, a fixed expense would be something like cost of land, if they leased it, the lease amount. And of course, if they own it, the fixed expense would be the property tax. Those expenses have to be paid, no matter what. That's why we refer to them as a fixed expense, because no mater what, they have to be paid. So, what is a semi fixed expense. A semi fixed expense would things that are veritable. They still have to be paid, but you're not sure what the amount's going to be. What are those? Well, utility, utilities could include electric, gas or water. The cost might vary monthly. But to operate the hotel, those expenses have to be paid. They may not be under your direct control, the totals, the amounts, the monthly amounts. But the fact that you have to pay it, is under your control. On those fixed expenses, you can't control those, those are fixed. That means that they have to be paid, no matter what. And the last one of course, is your veritable expenses. And what would be veritable? Well, labor and labor is directly related to the number of employees. Now that is something that can be controlled. You can control that by the number of hours you assign, the over time you assign and the number of people you hire. So, today we gave some examples of semi, fixed expenses in the hotel industry.